Earlier this fall, letters started to go out from the Office of Child Support in Lansing to payers of child support notifying them if their name had been submitted to the Michigan Department of Treasury or the United States Department of Treasury for the purposes of offsetting any tax refund to pay past-due child support.  These letters are known as “pre-offset notices.”  Tax offsets often lead to questions for both the payer of child support and the payee.  To help lessen the confusion regarding tax offsets, the Friend of the Court thought it would be beneficial to share answers to the most common questions received by staff regarding tax offsets.

What is a tax offset?

If a taxpayer is behind on his or her child support, the taxpayer’s state and federal tax refunds can be intercepted and re-directed to the appropriate state child support agency to pay towards the taxpayer’s child support arrearages.  This is known as a “tax offset.”

How far behind on child support do I have to be for my tax refund to be used for a tax offset?

Under the Tax Offset Program, for a taxpayer’s federal taxes to be used to offset child support arrearages, the taxpayer must be $150 or more behind in child support for cases where the family received Temporary Cash Assistance for Needy Families from the state and there is a child support arrears owed towards TANF arrears.

If the child support arrears are non-TANF arrears, the taxpayer must be $500 or more in arrears for his or her federal taxes to be used for a tax offset.

For both TANF and non-TANF arrearage cases, the arrears must have accrued under a court or administrative order for support and be verified by the Michigan Child Support Enforcement System for a federal tax refund to be used for a tax offset.

A taxpayer’s state tax refund from the State of Michigan can be used towards a tax offset for child support arrearage if the taxpayer has an arrearage of $150 or more – regardless of if the arrears are TANF or non-TANF – as long as the arrears accrued under a court order for support.

What if I filed taxes jointly with my spouse?

If you filed taxes jointly with your spouse, your spouse may file an “injured spouse” claim.  This is a claim indicating that part of the tax refund was based on your spouse’s income and should not have been used to pay your child support.  Form 8379 to submit an injured spouse claim regarding a federal tax refund can be obtained from the IRS’s website.  Forms to submit an injured spouse claim for a State of Michigan tax refund can be obtained from the Michigan Department of Treasury’s Website.

When will the payee receive child support from my tax offset?

This depends on several things.  Money from a federal tax offset will be used first to pay overdue support owed to the state and then any remaining money will be sent to the payee.  This means it is possible there may not be money left to send to the payee depending on what was owed to the state.  Money from a state tax offset will go to pay current child support and then past due support owed to the individual payee if the payee is not currently receiving TANF.

Payers and payees should both keep in mind though that a transfer of money to the payee may not happen immediately. Under federal law, if the payer filed a joint federal tax return with his or her spouse, the Friend of the Court is required to hold the funds for six months before it can send any money to the payee.  This is to allow the payer’s spouse time to file an injured spouse claim.

Is there an appeal process?

There is an appeal process for contesting tax offsets.  The pre-offset notice sent to the taxpayer prior to having his or her taxes intercepted for at a tax offset provides instructions regarding how to obtain an administrative review of the tax offset.

If you have questions about the FOC that you think would be helpful to address in future columns, please send them to the FOC email address:  foc@cassco.org

Sarah Mathews is the deputy Friend of the Court Cass County Friend of the Court.